Gyroscopic Investing

I know that Tortoise recently asked about 529 plans. I know Cortopassi has at least one child at Notre Dame. It seems that with this older group their children have already been through college. I'm not remembering that many others with children currently in colleges.

However, this is an excellent article on paying for college.

One thing for Tortoise and 529 plans: "When families use different vehicles, they must also consider the tax ramifications, Riskin says. For instance, families who claim the American opportunity tax credit (which is based on $4,000 in qualified education expenses, for a maximum $2,500 credit per year) can’t use the same expenses if they take a tax-free distribution from a 529 college savings plan."

And, some colleges now cost $80,000 per year??!!!

Vinny

College Prep

https://www.fa-mag.com/news/college-pre ... section=47

Thanks for the info, Vinny. I’ll keep this in mind.

I really hate the Rube Goldberg machine that the U.S. tax code has become. Life is too short to waste on that kind of nonsense.

I figured I would make things simple and just give my niece and nephew a cash bolus instead of "college money." Not in a UTMA, since that might affect them negatively with scholarships or whatever, but just straight up cash. They can use it to pay for college or a car or a small business or investments, etc.

Having been through this with our children, my impression is that saving for college just means you are going to pay for your own and another couple of students who can't pay. I mean the true cost of college is probably 1/3 of the list price. And no one pays 80K, that's a starting point to make everyone feel good about getting "scholarships". "Hey, I got a 30K scholarship from Prestigious U!" Guess what, you're still paying for one or two other kids.

I Shrugged wrote: ↑Tue Sep 01, 2020 11:36 am Having been through this with our children, my impression is that saving for college just means you are going to pay for your own and another couple of students who can't pay. I mean the true cost of college is probably 1/3 of the list price. And no one pays 80K, that's a starting point to make everyone feel good about getting "scholarships". "Hey, I got a 30K scholarship from Prestigious U!" Guess what, you're still paying for one or two other kids.

The article informed me of something that had happened to me 50 years ago and which until reading that article I'd not known was a common practice.

For freshman year they gave me a scholarship of 20% of the tuition. The second year they took it away saying my family no longer needed it. See from the article that that is common.

I questioned it at the time as a fellow student who was the nephew of a U.S. Senator did not have his taken away.

Vinny

Kriegsspiel wrote: ↑Tue Sep 01, 2020 6:09 am I figured I would make things simple and just give my niece and nephew a cash bolus instead of "college money." Not in a UTMA, since that might affect them negatively with scholarships or whatever, but just straight up cash. They can use it to pay for college or a car or a small business or investments, etc.

If you plan to give more than $15k to each niece/nephew, I assume that you'll spread it out to $15k per year (or whatever the IRS limit is at that future time) over two or more years to avoid getting hit by the U.S. gift tax?

Tortoise wrote: ↑Tue Sep 01, 2020 1:24 pm

Kriegsspiel wrote: ↑Tue Sep 01, 2020 6:09 am I figured I would make things simple and just give my niece and nephew a cash bolus instead of "college money." Not in a UTMA, since that might affect them negatively with scholarships or whatever, but just straight up cash. They can use it to pay for college or a car or a small business or investments, etc.

If you plan to give more than $15k to each niece/nephew, I assume that you'll spread it out to $15k per year (or whatever the IRS limit is at that future time) over two or more years to avoid getting hit by the U.S. gift tax?

Unless you plan on giving them each upwards of $10MM, there won't be any gift tax, but you would have to fill out a form if you exceed the $15K annual exemption.

Xan wrote: ↑Tue Sep 01, 2020 2:10 pm Unless you plan on giving them each upwards of $10MM, there won't be any gift tax, but you would have to fill out a form if you exceed the $15K annual exemption.

Interesting, I never knew that!

Now I know about yet another knob on the Rube Goldberg machine.

Get a Head Start on College Savings

It’s a daunting prospect. In 18 years, attending an in-state public college for four years will likely cost a total of about $233,000.

https://www.kiplinger.com/article/colle ... vings.html